Q3 2022 InspireMD Inc Earnings Call
Good morning, and welcome to the inspire M D third quarter 2022 earnings call. At this time, all participants are in a listen only mode.
A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.
Please note this conference is being recorded.
Now I'll turn the conference over to Chuck without with lifestyle margins. Thank you you may begin.
Thank you operator, and good morning, everyone. Thank.
Thank you for joining us for the inspire in the third quarter of 2022 financial results and corporate update conference call.
Joining us today from inspire RMB or Marvy, Bachman, Chief Executive Officer, and Craig Shaw, Our Chief Financial Officer.
During this call management will be making forward looking statements not historical facts and are based upon managements current expectations beliefs and projections many of which by their nature are inherently uncertain.
They involve risks and uncertainties that may cause actual results to differ materially from those expressed in the forward looking statements.
More information about these risks please refer to the risk factors described in inspire Mt's. Most recently filed periodic reports on Form 10-K, and Form 10-Q filed with the U S Securities and Exchange Commission and inspire in this press release that accompanies this call, particularly the cautionary statements made.
Sure.
The call contains time sensitive information that is accurate only as of today November eight 2022.
Except as required by law inspire indeed disclaims any obligation to publicly update or revise any information to reflect events or circumstances that occur. After this call.
It is now my pleasure to turn the call over to Marvin Philosophy, Chief Executive Officer Arvind. Please go ahead.
Thank you Chuck and thanks to everyone for joining our call. This morning.
Our third quarter results reflect a continuation of our recent progress and momentum we generated total <unk> revenue of over $1 4 million.
Representing growth of nearly 39% over the third quarter last year.
During the quarter, we sold 2600 24, <unk> systems as compared to <unk> hundred nine in the same period a year ago. This represents a growth of 54% year over year.
As we share a portion of our sales revenue with distributors and the majority of our markets procedural volume is a more accurate indication of market penetration and share retention.
As we indicated last quarter, we currently enjoy greater than 20% share in approximately half of our markets with some territories up to over 80%, which remains the bellwether of our focus and dominating the carotid revascularization space with the <unk> stent system across the broadest vascular specialists treating patients long.
Our new delivery systems, including our new Trans carotid and advanced next generation transfer Emerald platform will enable share growth and accelerate the conversion of vascular surgeons converting to our endovascular platform.
As a reminder, amongst vascular interventions carotid artery disease lags all other procedures in terms of percentage of cases that are treated endovascular Li estimated at 25%. Currently so when you look at the availability of conversion of procedures to stenting. There remains a significant number of surgical procedures that we believe can be.
Converted with our next generation micro mesh protected device driven by our unmatched clinical data now out as far as five years with best patient outcomes as compared to both first generation stents and open surgery.
In terms of market conditions, the regulatory landscape in Europe for all medical device companies remains in the midst of a sea change with new compliance regulations under the new MTR certification for CE, Mark we are working with our notified body on compliance and to secure the continuation of our certificate under the new.
<unk>, which currently ends November 12th while preparing our customers and distributors with sufficient inventory to mitigate as best as possible any potential delays in the certification process.
Our presence at important medical meetings is also a key component of our long term growth strategy and provides an effective platform from which we can espouse. The many benefits of <unk> as compared to both conventional stents and surgery.
In September the CCAR. The Optima study was selected in the 2022 TCT conference to be presented as a part of the featured research program.
The presentation, which was delivered by professor <unk> reviewed the findings of this multicenter investigator initiated trial known as CCAR to optima, comparing both procedural residual plaque prolapse through the stent struts and clinical outcomes of patients treated with <unk> versus objective performance goals.
After carotid stenting.
Professor <unk> described the results as unprecedented because of the total elimination of carotid artery related plaque prolapse with C guard measured with systemic <unk> ultrasound assessment.
The clinical outcome showed at 30 days and ipsilateral minor stroke rate of only <unk>, 7% and no major strokes.
This presentation and add to the significant body of evidence that we have compiled over the years, including 850 patients demonstrating unmatched performance and stroke prevention delivered by Sea guard with its proprietary micro net mesh protection versus all other cast stent platforms and surgical treatment options currently available therefore.
For our strategy remains unchanged, which is to focus on stent performance through superior outcomes and patient care with all specialists treating carotid artery disease.
Now turning to other developments in September we jointly announced with <unk>, a leading comprehensive medical technology contract research organization that we have entered into a strategic partnership agreement to accelerate new product development and commercialization.
Speed to market is a critical success factor for any new medical technology, and given the increasingly complex regulatory and clinical requirements in many markets <unk> full continuum of development services will serve us well as we work to further expand our pipeline as quickly and efficiently as possible.
In terms of our U S. IDE trial C. Guardians. We currently have 19 U S sites enrolling patients with plans for two more in Europe five sites are now enrolling in.
And all 24 actively enrolling sites that are building cases in an accelerating pace, which is very encouraging.
Our current outlook remains consistent with enrollment completion by approximately Q1 of 2023.
Regarding Japan, we have made progress since our last quarterly update in our discussions with potential distributor partners interested in representing C Guard and we continue to see a very high level of interest and agreement if executed would complement the distribution agreement in China, We signed last year.
As we have noted in the past Asia is a very important market to us as the existing standard of care for procedural intervention is predominantly endovascular focused and less surgically dominated in the U S and certain European markets.
In terms of product pipeline, the CCAR EPS stent platform remains the foundation of our business as the device drives patient outcomes beyond the selected delivery option to fully utilize the full potential of <unk>. We are developing two new delivery systems to drive utilization across the broadest vascular specialists community we continue to <unk>.
Advanced developments of our new Trans femoral delivery system, <unk>, Prime which will be available in both standard and short shaft versions compatible with the development of switch guard our T car accessory device in combination. These will offer a trans carotid option to our portfolio designed for those clinical needs and conversion.
Of greater surgical procedures to the CCAR EPS stent platform.
We continue to work tirelessly toward our goal of changing the paradigm of how carotid stenosis is managed with CCAR to EPS. We believe we can offer the best patient outcomes and broadest set of tools to unlock the tremendous potential of this rapidly evolving market segment. We look forward to a catalyst rich 2023, as we continued to establish C guard.
As standard of care.
With that I'll turn the call over to Craig to review, our first quarter financials Craig. Thank.
Thank you Marvin for the third quarter of 2022, total revenue was $1 million and $431000 compared to $1.071 million. During the third quarter of 2021. This represents an increase of 33, 6%.
This increase was predominantly driven by a 38, 8% increase in sales of <unk> EPS to $1 431000.
In the fourth quarter of 2022 from $1 $31000 in the same period, one year ago. This sales increase was due to growth in existing markets as well as U S sales related to send to using the <unk> U S food and drug administration clinical trial.
Gross profit for the third quarter of 2022 with $366000 compared to a gross profit of $92000 for the third quarter of 2021. This represents an increase of almost 300%.
This increase resulted from higher revenue and reduction in write offs training expenses and miscellaneous expenses gross margin increased to 25, 6%. During the three months ended September 32022 from eight 6% during the three months ended September 32021.
Total operating expenses for the third quarter of 2022 with $4 million $976000, an increase of $853000 compared to $4 million 123000.
For the third quarter of 2021. This increase was primarily due to increases in expenses related to the commencement of the <unk> FDA study and share based compensation expenses.
Net loss for the third quarter of 2022 totaled $4 million $529000 of <unk> 58 per basic and diluted share compared to a net loss of $4.071 million was <unk> 53 per basic and diluted share for the same period in 2021 as of September 30.
2022, cash cash equivalents and short term bank deposits with $21 million compared to $34 million as of December 31, 2021 that concludes the financial review.
Operator, we will now turn the call over to you for questions.
And at this time, we will be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question in queue. You May Press Star two if you would like to remove your question from the queue. So participants using speaker equipment, it may be necessary to pick up.
Your handset before pressing the star keys.
One moment, please while we poll for questions.
And our first question comes from the line of Ben Hayner with Alliance Global Partners. Please proceed with your question.
Good morning, gentlemen, congrats on the progress and thanks for taking the question.
First off for me just on the enrollment for C Guardians.
Good to see that it remains on track here.
Earlier.
Schedules.
Can you give us a sense of where enrollment stands today I mean I would.
Imagine, it's safe to say that you have.
Got over 200 people enrolled in the study but.
Any additional color that you can provide there.
Yeah, Hi, thanks, Thanks for the question.
I would characterize it this way we've accelerated our enrollments up pretty aggressively over the last quarter or so as we've mentioned in prior calls.
Thank you.
Your question is relevant and I think we will we will certainly hope that we can be within that timeframe in the first quarter bye.
By the end of the first quarter of 2023 for full enrollment so things are going very well and I think adding our European sites over the last quarter has certainly helped the enrollment.
<unk> added new U S site. So so far everything is going according to plan for end of Q1 2023.
Okay, Great and then on crest to any more any more color. There I think last quarter you were looking at kind of the first Jay it's being done.
In the very near future have there been a lot of cases done.
You were talking about 20 potential site.
Where does that stand today.
Yes, the process of getting these contracts completed with these sites.
It's been a little more time consuming than we had thought.
We're piggybacking on our current trial.
That's being sponsored outside of our control it's been a little slow in terms of enrollment, but we certainly look forward to that progressing and accelerating as well we've as I think I mentioned in the last call. We've added sites specifically that are also the Guardian site, which I think.
Terms of training and comfort with the device. So we will give you an update and a bit more detail I think over the next quarterly reporting in terms of specific number of cases.
Okay. That's helpful.
Then on the CE Mark certification if there is a delay I know you've got a handful of days left here.
Do you have a sense of how long it might be before.
That's in place.
Yes, Ben it's difficult to estimate that we've worked very closely with our notified body. There as you know the complexity of the regulatory climate in Europe have changed dramatically and we've stayed very close to this obviously and it is our top priority as a company to make sure that all of the documents are well in order and that we are in full <unk>.
Clients, but as we work through the details there just some unknowns that debt.
That we haven't fully gotten our hands around and were waiting for feedback, but we've also been working closely with our distributor partners to make sure that there are sufficient inventory.
In the market. So that did see guards are always available, but certainly as that unfolds, we'll provide a lot more detail, but we're working very closely on a day to day basis with our notified body to make sure that things remain in order.
Okay.
Is it fair to say that you don't anticipate any impact to the end users or.
Yes at least at this time.
Sure.
What's how would you characterize that.
Yes, I think I think our first priority band has been to make sure that we have sufficient inventory in the market notwithstanding the data verification. So thats priority one is to make sure that he guards are sufficiently inventories in the market as we work through the final details as far as the certificate.
As concerns so that debt.
That's step number one and then as we work through the timetable with our notified body hopefully there'll be no no delays and further filling the pipeline with devices. That's the plan.
Okay.
That's helpful.
On the.
Obviously, there have been some pretty big currency impacts.
Sure.
Dollar versus the Euro certainly.
But backing those out I mean, it looks to me like your local currency.
Local currency Asps.
Increase.
Kind of mid single digits.
Is that does that sound right, Craig and then.
Any more color on the market share gains I think you mentioned maybe.
Maybe.
A couple of geographies being over 60% last quarter and now.
It sounds like they are.
So at least one that's over 80% share that you guys have.
Picked up.
Any color on that.
Yes, Youre right about the exchange most of our sales in Europe with the Euro.
So there has been a.
Strengthening of the U S dollar, which we reported but we have been trying to raise prices across the board or supply chain issues, causing prices to go up worldwide.
Why were focusing on number of units sold and as you can see we're over 50% growth year over year.
It's more so that is the correct way to look at it.
And as far as market share Youre actually correct. So we do know as Marvin said more than about 50% of our company is greater than 20%.
Some companies countries actually reaching 16 as well as 80% of the market.
Okay, Great and then.
Lastly for me.
The Japanese level of interest.
Just curious on.
Are there.
Terms that.
Are more or less likely.
More.
Once once you do find a partner over there or is it more likely to be more front loaded or back end loaded with.
Royalty are.
Whats kind of the current thinking there to the extent that you can share.
Yes, I think we.
We sort of considered three aspects of.
Two maybe three different distributor partners over the last year or so that have expressed consideration. One is obviously the regulatory path, making sure that they are prepared to participate with us and as we did in China to make sure that the regulatory path is clear.
That could be considered as part of any agreement second is obviously their reputation and capability to distribute the carotid stent within their marketplace and then beyond that it generally follows kind of a standard royalty approach to numbers of units numbers of years those kinds of things, but we also are looking.
<unk> at the consideration of an investment as well, which was also consistent.
In China, when we signed that agreement so those three aspects of what we're considering and as I said, we've got more than one interested party. So that's good as well and we're working on those detailed so we hope to have some some new information and along those lines.
Okay great.
That's all I had gentlemen, thanks for taking the questions and congrats again on the progress.
Thanks, Brent as always we appreciate it.
And we have reached the end of the question and answer session I will now turn the call back over to Marvin Schlossman for closing remarks.
Great. Thank you I would like to thank everyone for taking the time today to join the call and the ongoing support we're extremely proud of the progress from this quarter and year to date and look forward to a strong finish as well as continued momentum into 2023. Thank you very much.
And this concludes today's conference and you may disconnect. Your lines at this time. Thank you for your participation.
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